Find answers to regularly asked questions about spread betting sectors. You’ll also find more information in our bet details section.
WHAT ARE SECTORS?
A sector is the measurement of the combined value of the underlying stocks in a particular industry as represented on the FTSE 350 (itself a combination of the FTSE 100 and FTSE 250).
We offer markets in 35 sectors, including the popular mining and banking sectors, as well as the FTSE 250 which is itself classified as a sector for spread betting purposes.
Unlike stock indices, which represent shares from a huge range of different businesses, sectors will tend to move higher or lower depending on investor reaction to events affecting a specific industry. For example, stronger growth in China might cause the mining sector to rise, whereas it would be less likely to impact upon the insurance sector. Equally, more stringent financial regulation could cause the banking sector to suffer without impacting the media sector.
To find out which FTSE 350 shares make up a particular sector, take a look at our constituent shares document, below.
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What are the advantages of spread betting
Sector bets offer greater breadth than spread betting on shares, yet allow you to take a more targeted position than you can achieve by spread betting on an entire index.
Spread betting on a sector lets you use one bet to take a view on a group of shares that will tend to rise or fall together. This minimises the risk of spread betting on individual shares, which are subject to company-specific news such as takeover bids or going bust.
At the same time, if you think a piece of news or economic data will affect one sector particularly strongly, a sector bet allows you to target the industry without diluting your profit with the weaker performance of the rest of the index.
Who spread bets on sectors?
Sector bets can simply be an effective way to speculate on the fortunes of a particular industry. Whether you believe the mining industry is set to enjoy a purple patch, or think retailers are due to come under pressure, you can take a short-term view with a DFB or a longer-term position over a quarterly timeframe. Find out more about the bets on offer on the bet details page.
Alternatively, you might wish to use sector bets as part of broader spread betting strategy. For instance, you might feel the FTSE 100 has been oversold and is due to rise by 350 points over a fortnight, but think that food and drug retailers will be a weak link during the rally. In this case you could buy the FTSE® 100 stock index, while simultaneously hedging against weakness in the food and drug industry by selling that entire sector.
How does spread betting on sectors work?
Once you know the sector on which you would like to spread bet, you check the price quotation we are currently offering. If you think the sector will rise, you then 'buy' at the offer price, or 'sell' at the bid price. To close the bet you simply take the opposite direction; if you 'bought' to open, you would 'sell' to close the position, and vice versa.
The other key choice is the timeframe of the bet. If you believe the market volatility on which you are hoping to capitalise will be short-lived you would make a DFB, whereas a futures bet would be appropriate if you wish to hold the position for a longer period.
Why spread bet sectors with us?
- Tight spreads, just 0.2% on all UK sector DFBs
- Powerful, reliable and multiple award-winning trading platform
- Flexible order types let you spread bet over the timeframe you require
- Research and analysis to keep you informed
- Access to the latest commentary from our experts for informed trading
- Real-time charts let you see split-second changes and get the best price.
Learn more about spread betting with our free online seminars.
Spread bets are leveraged products. Spread betting may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.